Friday, December 31, 2010
Few Tips for Buying a Vehicle with Bad Credit
Approving a car loan considers a number of factors. They are repayment capacity, credibility and source of income of the loan applicant. Loans are for no charity. For lenders it is their business. Hence, they need to be assured that you have a regular source of income and able to payback the money with the mutually agreed period. This is not enough. Before approving you vehicle or any loan that involves higher amount of money, lenders check your credibility. It means they check your past behaviour related credits. Late payments, arrears, defaults, filing bankruptcy are treated as vulnerable credit behaviour. People having such adverse tags with their credit behaviour are refereed as bad credit borrowers. Lenders generally used to hesitate while they were approving loans to bad credit borrowers.
However, there is a turn in this situation with the advent of global slowdown. The economic recession has made bad credit a rule than exception. Instability in financial market, job loss and global recessionary wave has created millions of bad credit borrowers. Hence, they are no more treated as untouchable by the lenders. Bad credit borrowers are now allowed to take vehicle loans by paying a little extra rate of interest. In this article we will talk about the process of approval related to bad credit car loans and how you can get these loans faster. The tips for availing hassle free bad credit vehicle loans are:
Assess your credit score
The first step while taking loans for vehicles is having a clear idea regarding your current credit status. You can get it from your credit score. It is provided by credit bureaus without any cost. Here you will find all the minute details regarding your credit past. Once you access it and come to know that your credit score is below par never approach a lender who deals with good credit borrowers. It will lead to rejection of your approval. Search for the bad credit auto lenders and apply for them.
Estimate your budget and loans amount
After analysing your credit status the next step is estimating your budget. You should keep in mind that no auto financing company offers 100% finance. You have to bear a part of it. Hence prepare a budget regarding the amount of money you have and the amount you need as finance. As bad credit vehicle loans come with a higher rate of interest, it is advisable go for a higher down payment and lower loan amount.
Compare loan quotes of multiple lenders
Rate of interest on bad credit vehicle loans vary from lender to lender. Hence to get a fair deal you need to compare loan quotes of multiple auto lenders. These quotes are free of cost and you can access handfuls of them through few clicks on computer. While choosing a lender make sure that he has no hidden charges like processing fee and early payment penalty.
Repay on time
Repaying bad credit auto loans on time helps in improving your credit score. Once the dark patches of adverse credit rating are cleared you can raise loans at competitive rate.